Thursday June 24th, 2021

The US$ is steady, oil prices, equity markets and US yields all edge higher ahead of flurry of US data. Risk on sentiment is returning after the Fed appears to have dialed back its hawkish tone and reiterates its transitory inflation narrative. The focus today will be on the US Jobs data, US GDP, US Durable Goods, alongside Fed speakers which will provide intraday market direct. In other news, A bipartisan group of US senators said it had reached a deal on a “framework” for a US$1.25T infrastructure spending bill and is planning to meet with President Biden today. Sino/US tensions remain high as the US blocks some solar goods from Xinjiang. In the Currency markets, China’s central bank sets the CNY daily midpoint weaker for an 8th straight day in an attempt to stabilize market expectations and prevent speculation to strengthen the CNY. Markets continue to favour NOK, CAD & NZD after their central banks have indicated they will be tightening into 2022. CNY is up 0.08%, While Asian currencies mixed with KRW up 0.4%, SGD is up 0.2% INR is flat while THB is down 0.15%. Trading currencies are firmer with JPY up 0.1%, MXN & NZD firmer 0.2%, NOK strengthens 0.4% while ZAR & AUD are flat. US data will provide intraday direction to the markets. 

Oil prices hold near multi-year highs as travel increases and EU & US strong economic data bolstered confidence for longer term oil demand. The Iranian claims that the US will lift oil sanctions was rebuffed with the US saying that nothing has been agreed. C$ edges higher as oil prices firm and risk on sentiment returns as the Fed reassures markets that it won’t rush to hike rates. Intraday expect a potential increase in volatility with the release of US data today, but bias is to sell US$ on any rallies. Support holds at 1.2248 if breached expect a C$ rally to 1.2152 next, with resistance resetting at 1.2375.

Eur remains within a tight trading range ahead of US data releases. German IFO came out stronger than expected this morning while Spanish GDP met expectations, both helping support the Euro. EU reopening, improving economic results and rising vaccinations is seeing optimism rising for Euro. A flurry of US data releases today will provide intraday direction to the markets, our bias remains to buy Euro on dips. Support holds 1.1860, while resistance remaining 1.1965, if breached look for 1.2050 next.

EURGBP gains after the BOE signals it will keep rates on hold and adopts a less hawkish tone.. Support at .8550 (1.1695), if breached look for .8495 Apr 5th (1.1770) with resistance remaining at .8665 (1.1540).

GBP dips after BOE keeps rates on hold. The BOE unanimously to maintain its benchmark rate at 0.1%, BOE Haldan broke ranks and voted to reduce the bank’s asset purchase target. The BOE said global supply chain issues could increase short term inflation pressures. The BOE said that the economic downside risk due to covid has reduced. Also in focus the unresolved UK/EU issues over the Northern Ireland protocol and the rise in the Delta variant continues to keep negative pressure on the pound in the short term. Intraday markets will shift its focus to US data releases today for further market direction today. Support holds 1.3900, with resistance at 1.4000.